Sponsor Company Name Sponsor Company Name

Weighing the Use of Compounds

Deciding how and when personalized medications make sense.

April 27, 2015 Photo

While compounded drugs, which are personalized medications for patients, have been around since the invention of the wheel, the practice has become a significant burden in workers’ compensation. The primary reason is their high cost, but there can be important patient safety and medical appropriateness questions, as well. And, since all compounded drugs and compounding pharmacies are not created equal, the art is in deciding how and when to contest their use.

Compounds typically include one or more active ingredients combined with inactive ingredients in a topical, oral, or injectable formulation. Common active ingredients found in workers’ compensation are gabapentin (anti-epileptic), ketoprofen (NSAID), cyclobenzaprine (muscle relaxant), and capsaicin (topical analgesic). Per the California Workers’ Compensation Institute, most compounds found in workers’ compensation use are topical creams for pain management. Outside of workers’ compensation, compounds primarily are used for hormone replacement, dermatology, children’s formulations, individuals who cannot swallow pills, and anti-cancer treatment.

Why is workers’ compensation different? That is a rhetorical question, of course—we know why. According to Express Scripts’ 2014 Drug Trend Report, the use of compounds increased by nearly 72 percent between 2012 and 2013, and their average cost increased by nearly 30 percent (to $1,299.13 per script). For the first time, compounds also broke into the top 10 therapy classes list based on per-user-per-year spend. The 2013 First Script Drug Trends Analysis cites the cost of a 30-day supply of oral gabapentin at $165, whereas the powder (used in compounds) was $1,400 per month.

A story is shared among pharmacy benefit managers about a $23,000 compound that was rejected. It was submitted again for $12,000 and rejected and then submitted a third time for $5,000 and rejected. Finally, the compounding pharmacy called the payer and settled for $500. Apparently, the financial model is to hope the initial $23,000 invoice slides through unnoticed for payment. However, there likely is some profit in $500.

While exorbitant costs certainly are an issue, concerns about patient safety and clinical appropriateness are even more important. If higher costs yield better clinical outcomes for the patient, an argument could be made that the return on investment (ROI) is worthwhile. However, that is often not the case.

The vast majority of compounds are not approved by the U.S. Food and Drug Administration (FDA). Typically, individual ingredients have been approved, but combining them into a custom cocktail has not. According to the FDA, “If there is an FDA-approved drug that is medically appropriate for a patient, the FDA-approved product should be prescribed and used.”

Lack of dosage control can pose over-dosing dangers. An FDA-approved pill is a defined dosage amount, but compounds typically offer only instructions, not controls, for proper use. While a 5-milligram pill can be crushed or taken too often or too infrequently, the potential for inappropriate use is much higher with a compound.

Compounds are not considered first-line therapy. FDA-approved drugs or other treatment options should be attempted and proven ineffectual prior to introducing compounds. There can be an appropriate use of compounds when mainstream treatment options have failed, the compound has proven to address the condition, and the side effects do not outweigh the benefits.

Regulatory standards are variable. The number and types of regulations for compounding pharmacies vary dramatically from state to state. National standards have been created by the Pharmacy Compounding Accreditation Board, but it has limited enforcement mechanisms.

There is limited oversight by pharmacy benefits managers (PBMs) and pharmacists. Compounds are often created and billed by pharmacies outside the purview of a PBM or objective pharmacist. While there is a way for the PBM to flag a compound in its database, if that is not used, it is up to bill review or utilization review services or human interaction to notice the compound.

Poor compounding practices can result in contamination. According to the U.S. Centers for Disease Control and Prevention (CDC), the 2012 meningitis outbreak associated with the New England Compounding Center’s production of sterile injectable compounds affected 751 people and killed 64. Fourteen people were arrested, including owners and employees. Onsite conditions found by a federal inspection were troublesome (and gross) and included:

  • Greenish-yellow residue on sterilization equipment.
  • Surfaces coated with levels of mold and bacteria that exceeded the company’s own environmental limits.
  • An air-conditioner that was shut off nightly despite the importance of controlling temperature and humidity.

In direct response to this event, the Drug Quality and Security Act (DQSA) became law in November 2013 to provide the FDA with the ability to regulate compounding pharmacies and ensure compliance with current good manufacturing practices (CGMP).

Various states have attempted to address the financial motivation of compounding by applying fee schedules. For example, Ohio caps reimbursement at $600 with a dispensing fee of $12.50 for nonsterile drugs and $25 for sterile drugs. Twelve states require compounds to be billed at individual levels.

In Randol Mill Pharmacy, KVG Enterprises, et al. v. Stacey Miller and Randy Miller, a Texas Supreme Court decision is pending after January 2015 arguments regarding whether or not a compounding pharmacist will qualify for medical liability protections, which could have a chilling effect on the desire of pharmacists to create compounds.

The question remains: Are compounds really the right treatment? Following are some tactics to consider:

  • Contact the prescribing physician or review the progress notes to determine that the mainstream treatment options were tried and failed and to understand the clinical rationale for use of the compound—what condition it is supposed to alleviate and what research shows that it has been proven safe and effective for the condition.
  • Contact the compounding pharmacy to verify its compliance with quality assurance and manufacturing best practices and secure an explicit list of all active and inactive ingredients and their proportion to the whole.
  • Contact the PBM to ensure that no compound will be processed or reimbursed without some level of clinical review and identify a mechanism to manage compounds not processed through the PBM, e.g., mail-order or third-party billing.

Once these tactics have been considered, utilize evidence-based medicine to assess the clinical appropriateness of the individual drugs and their custom combination in the compound for the individual patient. If it doesn’t add up, just say “no.”  

About The Authors
Mark Pew

Mark Pew is senior vice president for PRIUM. He has been a CLM Fellow since 2011 and can be reached at  mpew@prium.net

Sponsored Content
Daily Claims News
  Powered by Claims Pages
Community Events
  Workers' Compensation
No community events
Sponsor Company Name Sponsor Company Name